How to trade gold: a complete guide to gold trading

Gold trading involves the buying and selling of gold as a financial asset, providing traders the opportunity to profit from changes in gold prices. Read on to explore the fundamentals of gold trading, gain insights into the factors influencing gold prices, and learn how to trade gold on Capital.com.

What is gold trading?

Gold trading is the process of buying and selling gold in the financial markets, providing investors with a means to capitalise on potential price movements of this precious metal. 

In commodity trading, gold has historically been seen as an opportunity for diversification and hedging, making it a significant component of many investment portfolios.

What moves gold prices?

Gold prices are influenced by a range of factors. Here are some of the main ones.

Supply and demand:

Like any other commodity, the basic economic principle of supply and demand can significantly impact the price of gold. Quite simply, if demand for gold increases or if the supply decreases, it can lead to higher prices.

Central bank policies:

Actions taken by central banks such as changes in interest rates or monetary policies can also affect gold prices. For example, if a central bank increases interest rates, this could make gold less attractive as an investment compared to interest-bearing assets. Saying this, sometimes gold prices may rise during periods of rising interest rates due to other economic factors.

Inflation and deflation:

Gold is often considered a hedge against inflation. When inflation is high, investors and traders may turn to gold as a store of value, as gold has traditionally retained its value during such periods while assets such as shares may be less reliable. Conversely, during deflationary periods, gold may not perform as well.

Geopolitical events:

Political instability, conflicts, and geopolitical tensions can drive investors to seek safe-haven assets like gold when more risk-on markets become less predictable. 

Currency strength:

The strength or weakness of major currencies, especially the US dollar, can influence gold prices. When the dollar weakens, gold becomes relatively cheaper for those holding other currencies, potentially increasing demand.

Market sentiment:

Investor sentiment and market perceptions about the global economy and financial markets can impact gold prices. For example, uncertainty in financial markets can often lead to increased demand for gold.

Mining costs:

The cost of mining and extracting gold can impact its supply. If mining becomes more expensive, it can reduce the available supply and potentially contribute to higher prices.

Why trade gold?

Traders are drawn to gold for various reasons. As outlined, gold is often seen as a hedge against economic uncertainty or instability. During times of market turbulence, inflation, or geopolitical instability, traders may turn to gold as a safe-haven investment. This is because gold is considered a store of wealth that is not directly tied to the performance of individual governments or economies. Traders can also use gold to diversify their portfolios, spreading risk across different asset classes. 

On top of this, gold’s liquidity boosts its attractiveness as a tradable commodity, as the likelihood of trades being executed at the desired price increases. 

Additionally, with its limited supply and the perception of its intrinsic value, gold has a reputation for retaining its value over the long term.

Trading gold with leverage

You can trade gold through financial derivatives such as spread bets and CFDs, which give you leveraged exposure to the fluctuating price of gold. It’s these underlying price fluctuations that traders attempt to profit on when taking a position on gold. 

By trading gold with leverage, you can control large positions with a relatively small amount of capital, or ‘margin’. However, it’s important to remember that gold trading with leverage can also amplify losses, so traders must use it with caution and have a solid risk-management plan in place.

Costs involved in gold trading

Like all of our markets, when you trade gold with us, you’ll pay a spread. This is based on the difference between the market price at which you can buy, and the price at which you can sell. 

For example, if you’re trading Gold Spot as a CFD on Capital.com, our spread is from 3 points, which you will pay on the opening and closing of the trade. 

You may also pay additional fees, for example if you use a guaranteed stop-loss* or if you hold a trade overnight. As with all Capital.com instruments, you won’t pay any commission when gold trading on our platform – but there may be other fees where applicable.

It’s advisable always to make sure you’re aware of the cost of trading before you open a position. You can do this via our charges and fees page.

*Stop-losses are not guaranteed, but we offer guaranteed stop-losses (GSLs) for a fee. You can check the GSL fee value in a deal ticket when opening a position and adding a GSL.

Gold trading examples

How to trade gold with Capital.com

You can trade gold with us by following these steps:

• Step 1Select Gold Spot from our commodities markets tab
• Step 2Choose whether to trade with a CFD or spread bet
• Step 3Decide on your trade size 
• Step 4Consider applying a stop-loss to manage risk 
• Step 5Open your position long or short
• Step 6Manage your position, monitoring fundamental and/or technical drivers
• Step 7Close your position

Why trade gold with Capital.com

When you trade gold with Capital.com, you’ll get:

• A clear, easily-navigable interface across desktop, app and tablet 

• Rapid withdrawals*

• Multiple chart types and 75+ technical analysis tools 

• Insightful education via courses, videos and webinars, as well as an in-platform, asset-specific Reuters feed

• Round-the-clock support 

Stay up to date with the latest gold news and analysis.

*98% of withdrawals are processed within 24 hours, according to our internal server data from 2022.

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